Jan. 12, 2012, 12:01 a.m. EST
Silver mine closure points to risk/opportunity
by Nigam Arora
Marketwatch.com
On the morning of January 11, 2012, there was a repeat of twin lessons for long investors in gold and silver miners. First it pays to understand the condition of mines. And second that the money is often made on the short side.
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The news was that the Mine Safety and Health Administration ("MSHA") ordered the silver shaft at the Lucky Friday mine closed for removal of built-up material in the shaft. The silver shaft is a one-mile deep shaft from the surface and the primary access to the Lucky Friday mine. This order was pursuant to the investigation following the December 14, 2011 rock burst.
Compliance with the order is expected to take through year-end. Hecla's 2012 silver production is now estimated to be approximately 7 million ounces. Previous estimate of the production was 9.5 million ounces.
The stock of Hecla was crushed ending the day down 21% at $4.61 after trading as low as $4.25.
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"The Lucky Friday mine is a world-class mine that we see producing silver for decades to come. Hecla and the Lucky Friday mine have faced challenges in the past and we will once again overcome them."
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Investors are well advised to pay attention to reports of mining accidents. As this article shows, accident reports often provide opportunities.
It was obvious that the probability of an adverse order from MSHA against Hecla was high based on the prior incidents at Lucky Friday mine.
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Opportunities in miners abound and are usually more profitable than just trading GLD and SLV.
Full article: http://www.marketwatch.com/story/silver-mine-closure-points-to-riskopportunity-2012-01-12?link=MW_TD_latest
Gold is $1,581/oz today. When it hits $2,000, it will be up 26.5%. Let's see how long that takes. - De 3/11/2013 - ANSWER: 7 Years, 5 Months
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